1 Introduction
Small business social responsibility (Wickert et al.
2016) differs from CSR in large multi-national organizations (MNOs) (Spence
2016; Gray and Jones
2016), as a growing body of literature shows (Jenkins
2006,
2009; Spence
2016; Murillo and Lozano
2006; Hammann et al.
2009): Feeling lower institutional pressure to act responsibly (Jenkins
2004), SMEs seem to be driven by values and beliefs instead of strategic considerations or formal codes of conduct (Woods and Joyce
2003; Laguir et al.
2016; Jenkins
2004; Wickert et al.
2016). However, they often struggle with scarce financial and time resources as well as a lack of knowledge when confronted with stakeholder demands (Perrini et al.
2007; Graafland et al.
2003). This reduces the probability that SMEs adopt CSR out of a mere “me too” attitude. Instead, reputation (e.g., Soundararajan et al.
2017; Murillo and Lozano
2006; Jenkins
2006; Fuller and Tian
2006), personal values and conviction (e.g., Spence et al.
2003; Murillo and Lozano
2006; Hammann et al.
2009) play a crucial role. Furthermore, advantages such as increased sales (Jenkins
2006) and cost reduction (Gadenne et al.
2009) as well as employer attractiveness (Jenkins
2006; Perrini et al.
2007; Worthington et al.
2006), higher organizational commitment (Farooq et al.
2014; Hofman and Newman
2014) and weaker turnover intentions (e.g., Ghosh and Gurunathan
2014) all factor in.
A defining characteristic of family firms is their intention to preserve the influential role of the founding family—namely their succession intention (e.g., Berrone et al.
2012). Literature indicates, but does not confirm, that succession intention has a positive effect on CSR activities (Meier and Schier
2021). Our study goes into depth, investigating this relationship. So far, literature on CSR in family firms has shown differences in the amount of CSR applied over time (Nason et al.
2018). An obvious reason could be a succession event (McGuire et al.
2012). Since the event itself is easily measurable, it became the focus of prior studies. Pan et al. (
2018) observed an increase in CSR-related activities shortly after a succession event, explaining it as the strategic intention to enhance visibility of the successor. However, despite their observation, it remains unclear why this happens at that particular point in time—businesses might, for example, be too caught up in the preparation of the succession, somehow losing track of their CSR beforehand. However, Pan et al. (
2018) only focus on the philanthropic side of CSR, not taking into account other aspects such as employees, environmental concerns, or fair market behavior. Furthermore, it seems reasonable to assume that it is not the event itself but rather the intention for succession that influences CSR activities in SME family firms (Li et al.
2015). Our study fills this gap, by bringing succession intention to the center of the investigation of CSR activities.
Germany is a good example, with the main part of its SMEs belonging to the family-led “Mittelstand” (IfM
2020). Thereby, it represents a context of succession exemplary for many other countries worldwide. For our investigation, we adapted the approach of Zellweger et al. (
2012) to show how intra-family succession intention influences CSR behavior. By taking the organizational as well as the individual level of the owner-manager into account, we additionally follow a call by Soundararajan et al. (
2017) for multi-level research. Research centered on family firms describes heterogeneity in leadership as an important source of differing CSR performance (e.g., Labelle et al.
2018; Campopiano et al.
2014). One reason for this heterogeneity is the intention to succeed business within the family, often related to the theory of socio-emotional wealth (SEW). With CSR being driven at least partly by non-financial motivation and the theory of SEW presuming family firm peculiarities to increase the importance of non-financial goals, SEW is supposed to increase the firm’s social responsibility (e.g., Zellweger et al.
2013; Cruz et al.
2014).
From this background we argue that family businesses not only react to the looming CEO succession, but it might also be their foremost intention to keep business within the family that goes along with a differing CSR behavior. By showing that it is indeed this intention for intra-family firm succession that correlates with an increase of overall CSR, our study gives indication that family firms act less strategically than the findings of Pan et al. (
2018) demonstrate. We underline this by dividing CSR into differing aspects that depict the main stakeholders: CSR related to employees, the environment, the community as well as the market (El Akremi et al.
2018). Splitting up CSR confirms the influence of succession intention on CSR directed towards the community. Regarding other fields, this effect cannot be confirmed completely, which opens new questions on the social responsibility of family SMEs.
In contrast to our approach most empirical studies researching CSR and employing SEW focus on large, listed family firms (Cruz et al.
2014; Dyer and Whetten
2006; Garcia-Sanchez et al.
2020; Yu et al.
2015): They mainly use the extent of ownership and control to assess SEW (Cruz et al.
2014; Labelle et al.
2018; Yu et al.
2015). However, choosing continuation of the family dynasty out of the various dimensions of SEW (Berrone et al.
2012) has several advantages: First, firm succession is seen as an important facet of SEW. Berrone et al. (
2012) even state that family firms without transgenerational control resemble non-family firms. Second, the context of SME family firms allows keeping the other dimensions of SEW rather constant: Family control and influence is often high among SMEs with the sample at hand containing around 97% of owner-managed firms. Therefore, the identification of the family members with the firm can be assumed to be high as well. With respect to Audretsch (
2002), Jenkins (
2006), Soundararajan et al. (
2017) we can expect close and intensive relationships with various internal and external stakeholders (Kuttner et al.
2019). Altogether, our setting offers a unique opportunity to gather primary data on the SEW setting in German family SMEs. Therefore, this study asks: Do succession intention and family tradition correlate with a general as well as differentiated increase in CSR of small and medium sized family firms?
Our study makes three contributions to the literature: First, it shows that the mere intention to succeed within the family correlates with family SMEs’ CSR behavior. Therefore, it confirms that succession intention accumulates SEW as proposed by Schulze and Kellermanns (
2015). Second, it finds that the intention to hand over within the family selectively increases the consideration of external stakeholder needs, complementing existing work on family firm’s CSR in these situations (Pan et al.
2018). Thereby, the study is not limited to cash donations but includes non-financial engagement of the firms as well. Third, it shows that SEW works differently in SME family firms than in their larger counterparts: While Cruz et al. (
2014) observed that SEW reduces the consideration of employee needs, this is not the case in our SME setting.
The paper proceeds as followed: Sect.
2 provides an overview of the literature and deduces the hypotheses. Section
3 gives insight into the research design and the methodology applied while Sect.
4 presents our results. Finally Sect.
5 discusses our findings before summing up in Sect.
6.
4 Results
Table
2 characterises the sample. The firms employ on average less than 10 employees and are mainly lead by the founder in the first generation—however, there are also many older companies up to the
\(20{\mathrm{th}}\) generation. The responding CEOs are mainly male with an average age of 53 years and holding a
Meister degree.
Table 2
Summary statistics
Dependent variables |
Succession | 360 | 0.49 | 0.50 | 0 | 1 |
Generations | 379 | 1.78 | 1.44 | 0 | 20 |
Employees | 379 | 9.31 | 14.56 | 0 | 105 |
Firm age | 378 | 42.94 | 41.54 | 2 | 409 |
Revenue | 378 | 1.11 | 0.67 | 0 | 2 |
Invest | 366 | 0.99 | 0.64 | 0 | 2 |
Gender | 379 | 1.13 | 0.34 | 1 | 2 |
CEO age | 304 | 52.97 | 9.08 | 25 | 79 |
CEO education | 379 | 0.95 | 0.28 | 0 | 2 |
Observations | 379 | | | | |
Table 3
Regression CSR vs. family tradition and succession intention
Succession | | 2.34** (0.00) | 2.21** (0.00) |
Firm age | \(-\) 0.00 (0.91) | \(-\) 0.00 (0.69) | \(-\) 0.00 (0.87) |
lnEmp | 1.82*** (0.00) | 1.60*** (0.00) | 1.06* (0.01) |
Revenue = steady | \(-\) 1.29 (0.20) | \(-\) 1.01 (0.34) | \(-\) 1.15 (0.28) |
Revenue = increase | \(-\) 0.80 (0.50) | \(-\) 0.80 (0.52) | \(-\) 0.95 (0.45) |
Invest = steady | 0.60 (0.55) | \(-\) 0.02 (0.98) | \(-\) 0.06 (0.95) |
Invest = increase | 1.88 (0.15) | 1.44 (0.28) | 1.32 (0.32) |
Construction | \(-\) 0.78 (0.43) | \(-\) 0.71 (0.49) | \(-\) 0.98 (0.34) |
Health services | \(-\) 1.04 (0.65) | \(-\) 0.50 (0.83) | \(-\) 0.75 (0.74) |
Automotive | 0.03 (0.98) | 0.27 (0.84) | \(-\) 0.53 (0.70) |
Food, beverages | \(-\) 0.33 (0.85) | \(-\) 0.15 (0.93) | 0.31 (0.87) |
Industrial needs | \(-\) 0.44 (0.72) | \(-\) 0.59 (0.62) | \(-\) 0.77 (0.51) |
Personal needs | 0.65 (0.54) | 0.85 (0.45) | 0.76 (0.49) |
Gender | \(-\) 0.31 (0.81) | \(-\) 0.44 (0.74) | \(-\) 0.30 (0.82) |
CEO age | 0.04 (0.31) | 0.05 (0.22) | 0.04 (0.33) |
CEO education = 1 | 1.23 (0.40) | 0.71 (0.63) | 1.06 (0.47) |
CEO education = 2 | 2.78 (0.32) | 2.63 (0.34) | 2.89 (0.30) |
CEO motives |
Religion | 1.35 (0.19) | 1.39 (0.19) | 1.50 (0.15) |
Social motives | 3.56*** (0.00) | 3.57*** (0.00) | 2.92*** (0.00) |
Cost reduction | | | \(-\) 0.94 (0.19) |
Competitors | | | \(-\) 0.61 (0.68) |
Subsidies | | | 0.60 (0.67) |
Image | | | 1.10 (0.13) |
Employee retention | | | 1.64* (0.04) |
Conviction | | | 2.11* (0.05) |
Constant | 35.65*** (0.00) | 35.09*** (0.00) | 33.87*** (0.00) |
\(\hbox {Adj. R}^{2}\) | 0.16 | 0.19 | 0.21 |
N | 299 | 286 | 286 |
Effect of family tradition on CSR in general We expected CSR activity to rise with a longer family tradition, represented through the firm age as in Zellweger et al. (
2012).
4 A hierarchical multiple regression analyses the influence of family tradition on overall CSR activity (see Table
3). Model (1) and (2) are built analog to the models in the literature, controlling only for religion and social motives while model (3) contains the additional drivers as well. In contrast to Zellweger et al. (
2012), longer family tradition doesn’t show significant influence. H1 is therefore not supported.
Effect of founder generation on CSR Gómez-Mejía et al. (
2007) and Le Breton-Miller and Miller (
2013) propose to focus on the development stage of a family firm. We follow their proposition by replacing the firm age by a binary variable taking on 0 if the owner is the founder and 1 for later generations (see Table
4). There is no statistically significant effect for the development stage of the family, supporting neither hypothesis 2a nor 2b. However, a power analysis assuming a power of 0.8 and an expected R
2 of 0.1 revealed that the regression would have detected an effect size of more than 0.0337.
5 This questions whether there is an economically relevant difference at all between the CSR behavior of the founder and later generations. As we find neither influence of family tradition nor of being the founder generation, we keep family tradition as a control variable in our further analysis following Zellweger et al. (
2012).
Table 4
Regression CSR vs. founder generation and succession intention
Succession | | 2.289** (0.002) | 2.188** (0.003) |
Founder | \(-\) 0.986 (0.207) | \(-\) 0.903 (0.257) | \(-\) 1.135 (0.153) |
ln_emp | 1.988*** (0.000) | 1.737*** (0.000) | 1.233** (0.005) |
Revenue = steady | \(-\) 1.381 (0.173) | \(-\) 1.118 (0.294) | \(-\) 1.270 (0.231) |
Revenue = increase | \(-\) 0.851 (0.477) | \(-\) 0.850 (0.499) | \(-\) 1.035 (0.406) |
Invest = steady | 0.604 (0.544) | 0.052 (0.960) | \(-\) 0.016 (0.987) |
Invest = increase | 1.848 (0.152) | 1.439 (0.280) | 1.312 (0.321) |
Construction | \(-\) 0.807 (0.415) | \(-\) 0.729 (0.478) | \(-\) 1.008 (0.325) |
Health Services | \(-\) 1.428 (0.534) | \(-\) 0.842 (0.716) | \(-\) 1.193 (0.601) |
Automotive | \(-\) 0.011 (0.994) | 0.241 (0.859) | \(-\) 0.626 (0.650) |
Food, beverages | \(-\) 0.078 (0.962) | \(-\) 0.089 (0.957) | 0.540 (0.756) |
Industrial needs | \(-\) 0.561 (0.638) | \(-\) 0.702 (0.558) | \(-\) 0.916 (0.440) |
Personal needs | 0.652 (0.539) | 0.860 (0.443) | 0.812 (0.463) |
Gender female | \(-\) 0.474 (0.712) | \(-\) 0.545 (0.681) | \(-\) 0.484 (0.712) |
CEO age | 0.040 (0.282) | 0.048 (0.216) | 0.040 (0.297) |
CEO education = 1 | 1.152 (0.425) | 0.725 (0.619) | 1.009 (0.485) |
CEO education = 2 | 2.995 (0.279) | 2.773 (0.317) | 3.056 (0.268) |
CEO motives |
Religion | 1.486 (0.147) | 1.504 (0.153) | 1.680 (0.108) |
Social motives | 3.700*** (0.000) | 3.677*** (0.000) | 3.057*** (0.000) |
Cost reduction | | | \(-\) 0.987 (0.165) |
Competitors | | | \(-\) 0.572 (0.701) |
Subsidies | | | 0.650 (0.637) |
Image | | | 1.235\(^{+}\) (0.092) |
Employee retention | | | 1.687* (0.036) |
Conviction | | | 2.028 (0.057) |
Constant | 35.380*** (0.000) | 34.671*** (0.000) | 33.630*** (0.000) |
\(\hbox {Adj. R}^{2}\) | 0.164 | 0.191 | 0.220 |
N | 299.000 | 286.000 | 286.000 |
Effect of succession intention on CSR in general Succession intention shows an economically and statistically significant positive effect on CSR behavior for both models (2) and (3), which supports hypothesis 3 (see Table
3). Like in the study of Pan et al. (
2018) the influence of CEO social motives is significantly positive. Controlling for additional personal motives of the owner-manager in the final model (3) reveals further significant effects of employee retention and personal conviction.
An intention for intra-family succession turned out to be a powerful driver for responsible behavior when regarding the firms’ overall CSR score. But does this really mean that firms act in a comprehensive and balanced way, considering all relevant stakeholders? Or is the effect rather driven by strong engagement in some realms only?
Effect of family tradition and succession intention on CSR factors With CSR being a multidimensional construct, we apply the extended model (3) on different CSR factors. Exploratory factor analysis (Table
13 in the appendix) revealed five factors with eigenvalues > 1 (see Table
13 in the appendix) namely CSR directed towards employees (CSRemp), towards the environment (CSRenv), towards the community (CSRsoc), the market and supply chain (CSRsupply) as well as towards customers (CSRclient). A scree plot indicated five factors as well (see Fig.
4 in the appendix). The correlation matrix shows various correlations of statistical significance (see Table
12 in the appendix). As we expected possible correlation between the factors, we used oblique oblimin rotation, controlled for matching with the theoretical assumptions and dropped items with factor loadings of less than .35 or relevant cross-loadings (Hinkin
1998). We further checked the Kaiser–Meyer–Olkin values, finding only values above 0.67 with a mean of 0.75 (see Table
14 in the appendix). Regarding Cronbachs
\(\alpha \) we yielded poor results for CSRsupply and CSRclients, so we didn’t consider them for further analyses.
Table 5
Regression CSR factors vs. succession intention
Succession | 0.282 (0.28) | 0.241 (0.32) | 0.392* (0.01) |
Firm age | \(-\) 0.001 (0.75) | 0.001 (0.74) | 0.003 (0.13) |
ln_emp | 0.356* (0.03) | \(-\) 0.266 (0.06) | 0.441*** (0.00) |
Revenue = steady | \(-\) 0.170 (0.64) | 0.193 (0.57) | \(-\) 0.111 (0.62) |
Revenue = increase | \(-\) 0.023 (0.96) | 0.204 (0.61) | 0.167 (0.52) |
Invest = steady | \(-\) 0.144 (0.69) | \(-\) 0.598 (0.08) | \(-\) 0.051 (0.82) |
Invest = increase | 0.185 (0.68) | \(-\) 0.340 (0.43) | \(-\) 0.178 (0.52) |
Construction | \(-\) 0.475 (0.17) | \(-\) 0.875** (0.01) | 0.094 (0.66) |
Health services | \(-\) 0.147 (0.84) | \(-\) 0.769 (0.29) | 0.328 (0.49) |
Automotive | \(-\) 0.302 (0.51) | \(-\) 0.337 (0.45) | 0.154 (0.59) |
Food, beverages | \(-\) 0.770 (0.20) | \(-\) 0.420 (0.47) | 0.370 (0.33) |
Industrial needs | 0.027 (0.95) | \(-\) 0.106 (0.78) | 0.034 (0.89) |
Personal needs | \(-\) 0.195 (0.62) | \(-\) 0.081 (0.82) | 0.173 (0.46) |
Gender | 0.366 (0.43) | 0.292 (0.49) | \(-\) 0.468 (0.09) |
CEO age | \(-\) 0.039** (0.01) | 0.031* (0.02) | 0.001 (0.95) |
CEO education = 1 | 0.317 (0.55) | 0.087 (0.85) | 0.372 (0.22) |
CEO education = 2 | 0.023 (0.98) | 0.223 (0.80) | 0.968 (0.09) |
CEO motives |
Cost reduction | \(-\) 0.217 (0.38) | 0.237 (0.30) | \(-\) 0.289 (0.05) |
Competitors | 0.365 (0.49) | 0.101 (0.83) | \(-\) 0.437 (0.16) |
Social motives | 0.329 (0.21) | 0.260 (0.29) | 0.569*** (0.00) |
Subsidies | 0.271 (0.56) | \(-\) 0.012 (0.98) | \(-\) 0.109 (0.71) |
Image | 0.247 (0.32) | 0.337 (0.15) | 0.179 (0.24) |
Employee retention | 0.634* (0.02) | 0.110 (0.67) | 0.080 (0.63) |
Conviction | 0.165 (0.66) | 0.852* (0.01) | 0.243 (0.28) |
Religion | 0.398 (0.28) | \(-\) 0.005 (0.99) | 0.861*** (0.00) |
Constant | 9.434*** (0.00) | 6.931*** (0.00) | 3.385*** (0.00) |
\(\hbox {Adj. R}^{2}\) | 0.074 | 0.043 | 0.332 |
N | 262 | 286 | 286 |
As a result Table
5 shows significant positive effects of succession intention on social CSR (6) - which coincides with the findings of (Pan et al.
2018). Neither succession intention nor family tradition can be related to a significant increase in employee oriented CSR (Model 4). In hindsight of the importance employees play for the firm and the negative effects that succession can have on employees, this finding seems rather surprising. It points to an imbalanced increase of CSR in small and medium family firms under the influence of elevated socio-emotional wealth. However, the analysis does not confirm the findings of Cruz et al. (
2014) that SEW reduces internal CSR.
6 Unfortunately, in this analysis our model shows indication for misspecification in the RESET-test. However, repeating the analysis with the reduced motivational drivers (only social motives and religion as Cruz et al. (
2014) do it in their analysis) cured the misspecification while still not showing any significant effect for family tradition or transgenerational intention (see Table
15 in the appendix). Regarding CSR directed towards the environment in model (5), neither succession intention nor firm tradition do show significant influence. Engagement in this realm seems to be driven mainly by personal conviction, but not affected by SEW. Overall, the results support only H4c—SEW seems to fuel responsible behavior in a selective way. As mentioned in Sect.
3, we didn’t take CSR directed towards clients and the supply chain into account due to low values of Cronbach’s
\(\alpha \). As we found indication for heteroscedasticity in model (4) and (5), we repeated the analyses with a robust methodology, obtaining similar results.
4.1 Robustness
CEO age imputed Unfortunately the variable
Age of CEO yielded a high percentage of more than 18 % missings in the sample. To avoid possible bias we imputed missing ages with mvn regression. The results in Tables
6 and
7 show a bit lower coefficients for succession intention, but still on a statistically and economically significant level. Apart from that they are quite similar to the reduced sample with CEO age not imputed.
Table 6
Regression CSR with CEO age missings imputed
Succession | | 1.870** (0.01) | 1.738* (0.01) |
Firm age | 0.002 (0.80) | − 0.001 (0.92) | 0.001 (0.87) |
ln_emp | 1.724*** (0.00) | 1.498*** (0.00) | 0.886* (0.03) |
Revenue = steady | − 1.252 (0.18) | − 1.113 (0.26) | − 1.135 (0.25) |
Revenue = increase | − 0.784 (0.48) | − 0.868 (0.46) | − 0.871 (0.46) |
Invest = steady | 1.153 (0.19) | 0.820 (0.38) | 0.648 (0.48) |
Invest = increase | 2.204 (0.06) | 2.033 (0.09) | 1.721 (0.15) |
Construction | − 0.627 (0.50) | − 0.329 (0.74) | − 0.461 (0.63) |
Health services | − 1.212 (0.56) | − 0.699 (0.74) | − 0.662 (0.75) |
Automotive | − 0.016 (0.99) | 0.278 (0.83) | 0.026 (0.98) |
Food, beverages | 0.030 (0.98) | 0.487 (0.76) | 1.527 (0.34) |
Industrial needs | 0.260 (0.82) | 0.285 (0.80) | 0.264 (0.81) |
Personal needs | 1.130 (0.25) | 1.306 (0.21) | 1.330 (0.20) |
Gender | − 0.358 (0.74) | − 0.230 (0.84) | − 0.497 (0.65) |
CEO age | 0.042 (0.29) | 0.048 (0.26) | 0.038 (0.35) |
CEO education = 1 | 1.545 (0.24) | 1.217 (0.37) | 1.527 (0.25) |
CEO education = 2 | 2.990 (0.28) | 2.893 (0.30) | 3.338 (0.23) |
CEO motives |
Religion | 1.512 (0.12) | 1.639 (0.10) | 1.706\(^{+}\) (0.09) |
Social motives | 4.020*** (0.00) | 4.108*** (0.00) | 3.242*** (0.00) |
Cost reduction | | | − 0.764 (0.24) |
Competitors | | | − 2.691\(^{+}\) (0.05) |
Subsidies | | | 0.728 (0.57) |
Image | | | 1.118\(^{+}\) (0.09) |
Employee retention | | | 1.752* (0.02) |
Conviction | | | 2.170* (0.02) |
Constant | 34.248*** (0.00) | 33.675*** (0.00) | 32.970*** (0.00) |
N | 364 | 346 | 346 |
Table 7
Regression of CSR factors with CEO age imputed
Succession | 0.197 (0.42) | 0.185 (0.42) | 0.285* (0.05) |
Firm age | \(-\) 0.001 (0.71) | 0.002 (0.53) | 0.002 (0.21) |
ln_emp | 0.291 (0.06) | \(-\) 0.260* (0.05) | 0.393*** (0.00) |
Revenue = steady | \(-\) 0.292 (0.40) | 0.052 (0.87) | \(-\) 0.101 (0.61) |
Revenue = increase | \(-\) 0.073 (0.86) | \(-\) 0.114 (0.77) | 0.277 (0.24) |
Invest = steady | 0.011 (0.97) | \(-\) 0.314 (0.30) | 0.018 (0.92) |
Invest = increase | 0.362 (0.38) | 0.171 (0.66) | \(-\) 0.265 (0.27) |
Construction | \(-\) 0.341 (0.31) | \(-\) 0.580 (0.07) | 0.056 (0.78) |
Health services | 0.110 (0.87) | \(-\) 0.828 (0.23) | 0.196 (0.65) |
Automotive | \(-\) 0.179 (0.67) | \(-\) 0.151 (0.72) | 0.265 (0.31) |
Food, beverages | \(-\) 0.188 (0.72) | \(-\) 0.311 (0.55) | 0.525 (0.11) |
Industrial needs | 0.193 (0.61) | \(-\) 0.128 (0.73) | 0.133 (0.56) |
Personal needs | 0.045 (0.90) | 0.253 (0.45) | 0.075 (0.72) |
Gender | 0.162 (0.68) | 0.368 (0.30) | \(-\) 0.307 (0.16) |
CEO age | \(-\) 0.031* (0.02) | 0.027* (0.04) | 0.000 (0.96) |
CEO education = 1 | 0.399 (0.43) | 0.294 (0.50) | 0.385 (0.16) |
CEO education = 2 | 0.126 (0.90) | 0.169 (0.85) | 1.138* (0.04) |
CEO motives |
Religion | 0.472 (0.18) | 0.110 (0.73) | 0.865*** (0.00) |
Social motives | 0.516* (0.04) | 0.346 (0.14) | 0.611*** (0.00) |
Cost reduction | \(-\) 0.031 (0.89) | 0.026 (0.90) | \(-\)
0.250 (0.06) |
Competitors | \(-\) 0.037 (0.94) | \(-\) 0.543 (0.23) | \(-\) 0.424 (0.13) |
Subsidies | 0.391 (0.37) | 0.213 (0.61) | \(-\) 0.177 (0.50) |
Image | 0.270 (0.24) | 0.361 (0.10) | 0.148 (0.28) |
Employee retention | 0.768** (0.00) | 0.105 (0.67) | 0.097 (0.53) |
Conviction | 0.313 (0.37) | 0.704* (0.02) | 0.340 (0.08) |
_cons | 8.780*** (0.00) | 6.797*** (0.00) | 3.217*** (0.00) |
N | 301 | 346 | 346 |
Founder generation on CSR factors In the regression on the total CSR score, family tradition doesn’t reveal a positive significant effect on any of the factors. However, since we obtained such a diverse picture when distinguishing between the different CSR factors in hypotheses H4a to c, we repeated this analysis with founder generation instead of family tradition. This yields a slightly significant negative effect on the factor environment oriented CSR at a 10 % level (see Table
8).
Table 8
Regression CSR factors vs. founder generation and succession intention
Succession | 0.269 (0.293) | 0.248 (0.297) | 0.424** (0.007) |
Founder | \(-\) 0.377 (0.162) | \(-\) 0.437\(^{+}\) (0.087) | 0.146 (0.383) |
ln_emp | 0.414* (0.015) | \(-\) 0.185 (0.193) | 0.444*** (0.000) |
Revenue = steady | \(-\) 0.213 (0.559) | 0.154 (0.651) | \(-\) 0.079 (0.722) |
Revenue = increase | \(-\) 0.045 (0.916) | 0.164 (0.682) | 0.169 (0.518) |
Invest = steady | \(-\) 0.120 (0.736) | \(-\) 0.598 (0.076) | \(-\) 0.090 (0.681) |
Invest = increase | 0.186 (0.679) | \(-\) 0.348 (0.414) | \(-\) 0.188 (0.499) |
Construction | \(-\) 0.488 (0.160) | \(-\) 0.879** (0.008) | 0.108 (0.618) |
Health services | \(-\) 0.308 (0.682) | \(-\) 0.948 (0.197) | 0.373 (0.437) |
Automotive | \(-\) 0.340 (0.456) | \(-\) 0.377 (0.395) | 0.163 (0.575) |
Food, beverages | \(-\) 0.732 (0.207) | \(-\) 0.240 (0.669) | 0.501 (0.172) |
Industrial needs | \(-\) 0.037 (0.926) | \(-\) 0.160 (0.676) | 0.055 (0.827) |
Personal needs | \(-\) 0.212 (0.588) | \(-\) 0.044 (0.902) | 0.200 (0.390) |
Gender | 0.337 (0.469) | 0.197 (0.641) | \(-\) 0.488\(^{+}\) (0.078) |
CEO age | \(-\) 0.038** (0.004) | 0.033** (0.009) | 0.003 (0.709) |
CEO education = 1 | 0.331 (0.525) | 0.034 (0.942) | 0.319 (0.295) |
CEO education = 2 | 0.118 (0.908) | 0.305 (0.731) | 0.977\(^{+}\) (0.093) |
CEO
motives |
Cost reduction | \(-\) 0.231 (0.344) | 0.217 (0.343) | \(-\) 0.285\(^{+}\) (0.057) |
Competitors | 0.384 (0.465) | 0.113 (0.813) | \(-\) 0.449 (0.153) |
Social motives | 0.376 (0.155) | 0.312 (0.204) | 0.553*** (0.001) |
Subsidies | 0.275 (0.556) | \(-\) 0.015 (0.972) | \(-\) 0.157 (0.588) |
Image | 0.301 (0.232) | 0.400 (0.090) | 0.178 (0.249) |
Employee retention | 0.648* (0.017) | 0.118 (0.649) | 0.053 (0.756) |
Conviction | 0.142 (0.704) | 0.802* (0.019) | 0.224 (0.316) |
Religion | 0.449 (0.226) | 0.081 (0.809) | 0.869*** (0.000) |
Constant | 9.451*** (0.000) | 7.048*** (0.000) | 3.399*** (0.000) |
\(\hbox {Adj. R}^{2}\) | 0.082 | 0.054 | 0.328 |
N | 262 | 286 | 286 |
U-shaped form of regression One might argue that the influence CEO age exerts on the company’s CSR behavior might follow a U-shaped rather than a linear function with lower levels of CSR among younger CEOs struggling to keep the business going and among older CEOs being too busy preparing their succession. We therefore tested for such a relation including a quadratic term of CEO age. However, our analysis did not confirm a U-shaped relationship. Further research might build on this, taking into account the time the CEO actually holds the position. This would be a more exact specification as some CEOs might succeed into the position in a medium or higher age.
Moderating effects Instead of exerting direct influence, succession intention might act as a mediator or moderator on other correlations, such as the link between firm CSR and CEO age or firm CSR and firm age. We therefore conducted a series of tests, checking for interaction effects, for example among founder generation and succession intention (see Table
18 in the appendix). However, we didn’t find statistically significant results.
Industry adjusted CSR Following Pan et al. (
2018) we analyse for robustness reasons the influence of tradition and succession intention on industry-adjusted CSR. Industry-adjusted thereby means the individual firm CSR level minus the mean CSR level of the respective industry. The results of the analysis of industry adjusted CSR are very similar to the not industry-adjusted models (see Tables
16 and
17 in the appendix).
5 Discussion and limitations of the study
We found significant positive effects of succession intention on CSR in general as well as on community directed responsible behavior. Table
9 provides an overview over the results. This supports our notion that specific family characteristics, such as transgenerational intentions, indeed change a firm’s attitude towards CSR, supporting the theory of SEW. The analysis furthermore confirms that a distinction between the different facets of CSR needs to be made.
Table 9
Sum up of results
H1 | Firms with longer family tradition show a higher overall CSR activity | No significant effect |
H2a/b | Firms beyond the founder stage show a higher/lower level of overall CSR | No significant effect |
H3 | The intention to succeed business within the family leads to a higher level of overall CSR activity | Significant effect: confirmed |
H4a | Succession intention leads to an increase in CSR activity directed towards employees | No significant effect |
H4b | Succession intention leads to an increase in CSR activity directed towards the environment | No significant effect |
H4c | Succession intention leads to an increase in CSR activity directed towards society | Significant effect: confirmed |
H4d | Succession intention leads to an increase in CSR activity directed towards suppliers | No analysis |
H4e | Succession intention leads to an increase in CSR activity directed towards customers | No analysis |
We found social CSR to rise with succession intention. Obviously the realms affected by SEW are related to external stakeholders, which confirms the findings by Vardaman and Gondo (
2014) who suppose non-financial goals to be driven to a high extend by reputation concerns. Comparing the CSR engagement of listed family firms Cruz et al. (
2014) even find higher levels of SEW
7 to reduce the consideration of employees’ needs. They come to the conclusion that SEW might fuel intentions to keep control over the firm within the family, thus depriving internal stakeholders (Cruz et al.
2014). Our findings do not support their observation of a reduction of internal CSR with rising SEW. The reason might be the they measure SEW through the owning family’s share in ownership and management. As our sample contains more than 97% of owner-led firms, flat hierarchies and high concentration of power (as typical in smaller family firms) should give few reason for struggle about internal control. However, the results confirm their observation of an imbalanced CSR approach in a context of elevated SEW. Thus it is likely that the findings of Cruz et al. (
2014) apply for the private phase of a family firm life cycle as well, as questioned by Wright et al. (
2014). Furthermore, Ernst et al. (
2022) find SME sustainability to be highly influenced in general by employees’ expectations. This might explain why employee oriented CSR rises to a lower extent under the influence of succession intention. However, even if our results support Zientara (
2017) as well as Cruz et al. (
2014), the cross-sectional design of this study cannot prove causality. Future research could apply different research designs such as field experiments or long-term studies to check for causality as well as to identify possible reverse or dual causality in this context (Bascle
2008).
We find no increase in environmental engagement with succession intention present. This fits with the observation in the literature that family firms often focus less on environmental issues than non-family firms (Miroshnychenko et al.
2022; Dekker and Hasso
2014). While we can only speculate on the reasons thereof, this coincidence makes it less likely that mere resource constrictions—which non-family firms might face as well—are the reason. Institutional pressure might indeed be strong in a country with high environmental standards (Campbel
2007) such as Germany, leaving little space for additional initiatives for SMEs to improve environmental performance. However, this would not explain the international trend observed by Miroshnychenko et al. (
2022) that family firms exhibit a lower performance in environmental aspects. Instead the findings point to SEW having indeed contradictory effects on the different facets of CSR. This underlines even more the importance to treat CSR as a multidimensional construct in a differentiated way. Analysing CSR in a more differentiated way might help explain contradictory results, such as Fehre and Weber (
2019) who find no increase in CSR awareness of top management with family involvement. In the case of environmental performance, SMEs might come to the conclusion that their environmental efforts are not visible enough to yield reputational gain. If this is the case, we expect to see a turn in environmental performance of small and medium family firms with the debate on climate change gaining momentum.
Interestingly, our analysis of the correlation between firm tradition and CSR yields no significant effects, neither on total CSR nor on the CSR dimensions. This adds to the contradictory debate on the effect of family tradition in the literature: On the one hand, Zellweger et al. (
2012) find slightly positive results, indicating an increase in SEW with longer family tradition. This correlates with the idea of Schulze and Kellermanns (
2015) that SEW accumulates over time. On the other hand, Gómez-Mejía et al. (
2007) argue that SEW decreases when the family firm passes the founding owner stage. The fact that we find a slightly negative effect on one CSR dimension when exchanging firm tradition by family stage adds to this contradictory pictures. This could be an indication that firm tradition overlaps with other dimensions of SEW, such as identification or emotional attachment: Depending on how much the managing family member identifies with the strategic approach of preceding generations, firm tradition might factor in or not, as Dieguez-Soto et al. (
2021) observe in their qualitative study. We therefore propose future research to investigate the phenomenon more in depth to identify possible moderating or mediating effects in the interplay of family firm tradition and SEW.
Due to the complex nature of the construct, emotional attachment is a dimension we cannot control for in our setting. However, with the families’ livelihood and heritage often depending on the firm (Mitchell et al.
2011; Uhlaner et al.
2004), it can be expected to be rather high. Another aspect we can’t control for is the difference between a vague intention to succeed business within the family and actual plans including the nomination of a successor. With a denominated successor and concrete plans for the succession, the focus of the CEO might be deterred from the company’s social responsibility towards organizational issues related to the succession. On the other hand, CEOs might care even more about responsible behavior to hand over the company in a solid state and achieve a reasonable price. To specify further how succession actually influences CSR, future research might focus on this issue.
Two aspects restrict the generalizability of our findings. Legal framework, economic development and cultural or social orientation are found to be influencing factors on family firm performance and behavior (e.g., Wright et al.
2014; Farooq et al.
2017; Fitzgerald et al.
2010) often varying cross-nationally (Matten and Moon
2008; Perrini
2006). Restricting our inquiry to one single country therefore bypasses a possible source of bias. However, it might reduce the transferability of the findings. Although, there are indications for comparability among developed countries such as central Europe and the U.S. (Hauck et al.
2016), we expect numerous differences in developed and even more in developing countries. Thus, more research is needed to confirm the results. One further has to keep in mind the high percentage of owner-managers in our sample. Cui et al. (
2018) find family CEOs to act more socially responsible, even though family firms with non-family CEOs use long-term incentives to compensate for it. While being well representative for smaller enterprises, one has to be careful when generalizing to larger firms often lead by non-family CEOs. Furthermore, one should take the peculiarities of our sample into account: It contains mainly of small or even micro family firms with a high percentage of family members in management and director positions. Recent literature found a higher level of CSR respectively less underperformance in environmental responsibility in family firms with high family involvement (Mariani et al.
2021).
One shortcoming of the study is that it measures CSR only implicitly. As an intangible theoretical concept, it is rather difficult to measure CSR directly, making the use of indirect indicators acceptable (Margolis and Walsh
2003). As we only measure self-reported CSR in a form of firm policies and activities, we cannot gather from the results an objective impact of these measures or—as Bernard et al. put it—the corporate CSR performance (Bernard et al.
2018). As calls increase to investigate CSR impact (Grewal and Serafeim
2020) future research could add a more objective view, gained for example by integrating different stakeholders more directly.
6 Conclusion
Our paper gives insights into family SMEs’ employment of CSR. By focusing on succession intention and family tradition, we can show an increase of CSR alongside succession intention. Yet, family tradition does not influence CSR in any of our analyses. Also, when diving deeper into the different facets of CSR, our results seem to be driven mainly by the social aspects of CSR. This leaves us with the notion that CSR should be treated as a multidimensional construct in research as well as within the firm and in policy treatment.
Altogether, we contribute to literature investigating the role of CSR in an SEW context of small and medium-sized family firms. We thereby follow calls for a closer investigation of varying CSR over time (Chrisman et al.
2013) through our integration of succession intention as influencing factor for CSR employment. This adds to Schulze and Kellermanns (
2015) who assume SEW to be positively related with the intention to keep control within the family. The overall increase of social responsibility could be seen as a positive side-effect of succession intention. One could draw the conclusion that it happens out of planned and strategic behavior, comparable to how Suess-Reyes (
2017) observes family firms to prepare the next generation for their upcoming duties. However, the fact that this increase follows an imbalanced pattern indicates that family SMEs do not increase CSR strategically in a firm succession context. This leaves room for further research especially taking into account possible consequences of an imbalanced CSR approach.
For family SMEs, our findings show that they should gain a differentiated understanding of their CSR behavior. As any CSR activity is resource intense, the decision for an in- or decrease should be an informed one and not be taken out of a situational context such as the succession intention. Also, leaving out important stakeholders such as employees and the environment can have unforeseen consequences. Thus, an informed approach to CSR is important for the firm. As CSR is not easily implemented and affects external and internal stakeholders, firms should be aware of underlying drivers in order to make informed decisions on its use. More specifically, owners of family SMEs with a succession intention should pay attention how balanced their CSR strategy is.
Policy makers might also draw from our findings. For them, especially the notion of a differentiated view on the facets of CSR becomes important. The overall picture of CSR might be driven by dominant singular CSR dimensions, as our results on the differing facets of CSR show only social CSR to be positively affected by succession intention. This should be taken into account when developing reporting mechanisms and recommendations on CSR. As our results confirm, a general increase in CSR does not give any insights on the impact as important areas might have been left out. Keeping firms within the family has many positive aspects. Political decision makers can on the one hand deter from the study how important viable, future-oriented family SMEs are to increase overall firm CSR. On the other hand, the results point to the need to provide awareness raising programs to help family SME owners avoid negative CSR interaction. Enhancing our understanding of when and why firms employ CSR activities can help in setting future agendas for “context-specific organizational actions and policies that take into account stakeholders’ expectations and the triple bottom line of economic, social, and environmental performance” (Aguinis and Glavas
2012, p. 933).
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